How is house valuation arrived at?

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TheBlock

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Question for any EA's on board. How does the EA arrive at a valuation of a property? I'm thinking of remortgaging and need to guesstimate the current value of the house for my own calculations to ensure LTV suits me before I progress. If I am paying the EA for this valuation do I have input into how they arrive at the valuation or the valuation itself or are they also in someway working for the lending institution?

Hypotetically (sp?) What is there to guarantee the lending instiution that the LTV of >60% is correct? Is it possible to get an EA that will overvalue your property?

Thanks in advance.
 
"Is it possible to get an EA that will overvalue your property?"

Do you mean lie?

Do you see anything wrong with this question?

mf
 
mf1 said:
"Is it possible to get an EA that will overvalue your property?"

Do you mean lie?

Do you see anything wrong with this question?

mf
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Did you see the hypotetically part (even though it may be spelt incorrectly)?
 
The IAVI accreditation system is seen as a protection for the lending institution. In my own experience, it means very little as I was able to get get a valuation at a level I wanted rather than the real figure. We can argue about the rights and wrongs of such behaviour but that's the reality.
 
John Rambo said:
The IAVI accreditation system is seen as a protection for the lending institution. In my own experience, it means very little as I was able to get get a valuation at a level I wanted rather than the real figure. We can argue about the rights and wrongs of such behaviour but that's the reality.
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Thanks for this John Rambo. I'd be really interested to know the basics of how the valuation is arrived at (I know it's a profession and I'm not EA Bashing) is it as simple as looking at similar houses in the area and pricing in line with these?
 
TheBlock said:
Thanks for this John Rambo. I'd be really interested to know the basics of how the valuation is arrived at (I know it's a profession and I'm not EA Bashing) is it as simple as looking at similar houses in the area and pricing in line with these?
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Yes, that's pretty much it. For the moderators I'm certainly not going to namecheck or recommend the EA I used but I was asked what value I wanted put on my property as it was 'for a bank and we all hate them'. I'm not EA bashing but I have never met a single one that wasn't a complete bluffer and to call it a profession is an insult to doctors, lawyers and accountants. Despite what they may tell you, it most certainly is not rocket science.
 
Valuations would be determined by previous house sales in the area and equivelent areas and also current market trends.

It is not an exact science.
 
I'd be interested to know whether EA's are indemnified against future legal action. Say I go all 'sub-prime' for example...lose my job, hit the bottle etc. The bank repossess my property and try and sell it but achieve a sale price which bears little relation to the EA's valuation. They then do some investigation and see no similar properties were achieving such prices on the date of the valuation. Surely the EA is then in the firing line?
 
groom said:
Yes. An estate agent would never lie.
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No - the point I am making is that no-one seems to see anything wrong with asking the EA to lie.

You gotta say if the punters see nothing wrong with that, do you not just think yeh, whats with all the complaining about EA's, you get the EA's you deserve.

mf
 
mf1 said:
No - the point I am making is that no-one seems to see anything wrong with asking the EA to lie.

You gotta say if the punters see nothing wrong with that, do you not just think yeh, whats with all the complaining about EA's, you get the EA's you deserve.

mf
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I see something wrong with it
 
mf1 said:
No - the point I am making is that no-one seems to see anything wrong with asking the EA to lie.

You gotta say if the punters see nothing wrong with that, do you not just think yeh, whats with all the complaining about EA's, you get the EA's you deserve.

mf
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Who's asking the EA to lie?? I'm asked how they arrived at the valuation. Do you know the answer to the question or are you simple guarding the moral high ground?
 
Valuers can use several methods of valuation but the most common is the comparable method, where the property's value is assessed based on the recent market sales of similar comparable properties. And never take valuation or property advice from an agent or valuer who will arrive at a value as the situation desires.
 
Duplex said:
Valuers can use several methods of valuation but the most common is the comparable method, where the property's value is assessed based on the recent market sales of similar comparable properties. And never take valuation or property advice from an agent or valuer who will arrive at a value as the situation desires.
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What if that valuation suits your own agenda? EA's are gas really...'several methods of valuation...the Comparable Method'. As in, lash the address into myhome.ie and see what comes up. I'll bet there's a whole chapter on the Comparable Method in EA101. The usual bluff and fake names for what is essentially common sense.
 
John Rambo said:
I'd be interested to know whether EA's are indemnified against future legal action. Say I go all 'sub-prime' for example...lose my job, hit the bottle etc. The bank repossess my property and try and sell it but achieve a sale price which bears little relation to the EA's valuation. They then do some investigation and see no similar properties were achieving such prices on the date of the valuation. Surely the EA is then in the firing line?
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In the US one of the bigger lenders is facing a huge class action lawsuit alleging the company committed fraud by causing over-inflated home appraisals. (The higher the appraisal the greater the loan the more the profits etc.)

The difficulty in these cases is proof. However, in this case some emails surfaced in which the bank is alleged to be putting pressure on an appraiser to increase house values. All fine when the bubble was being inflated but now angry homeowners are left with homes that are worth far less than they were led to believe.

Here in Ireland evidence has emerged in recent days that some EAs may have been exaggerating reported sales prices to the IT by as much as 20%.
 
I guess the valuation would be "In the EA’s professional opinion", what would someone realistically pay for the property.
I have been asked my an EA what I value I was looking for. Im sure If I had asked for €500K on a €250 property, they would not do it but might go to €270.
 
How does the EA arrive at a valuation of a property
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For standard urban houses its simply a case of going by recent sales and using comparables, obviously for more obscure house types it requires digging a little deeper. If you ask an EA to boost the price chances are he will go as far as is plausible for it to actually sell for, I don't know any EA that would risk his livlihood for a paltry €130 fee, all stereotypes aside of course.

I'm not EA bashing but I have never met a single one that wasn't a complete bluffer
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Then I suggest that you broaden your horizens and widen your circle of associates.

to call it a profession is an insult to doctors, lawyers and accountants.
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I'm sure they manage to get by without the feeling that EA's are so undeserving of the prestigious title 'professional'.
 
Would the lender not have their own valuers look at the property? So if the estate agent is way out, the vaulers working for the bank, would have a different opinion?

Surely this is an area being looked at by all the big lenders at the moment as it must be seen as a risk they can no longer take give the current situation.
 
kkontour said:
The valuers are usually the lenders pre approved EA/Valuers
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Many merely ask that the valuer is an IAVI member. In my experience they'll inflate it by approximately 10% if you ask them but the knock on effect of this could be quite serious. The risk profile of all the banks could be quite different if the underlying assets are worth less than their 'book value'.
 
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